Broker News

Tough slog for first homebuyers in NSW

First homebuyers in New South Wales can expect to save on average for 5.7 years for a 20% deposit – the longest amount of time in Australia according to the annual Bankwest First Time Buyer Deposit Report.

The report shows that buyers in New South Wales require savings of $138,600 for a 20% deposit on a median priced house (as at June 2016).

The average amount of time to save this deposit has lifted from 4.3 years in June 2011 to 5.7 years in June 2016.

Victorian residents have to save for the second longest period of time (4.7 years) for a 20% housing deposit of $108,900.

This compares to the national average for an Australian first homebuyer couple, which is 4.4 years to raise a 20% deposit ($103,600) to buy a median priced house ($518,000) – two months longer than last year – based on an average combined salary of $116,072 for two people aged 25-34, saving 20% of their pre-tax income in a high interest online savings account.

Drilling down further on the capital city results, first homebuyers in Sydney need to save for an average of 8.4 years for a 20% deposit ($214,600) on a median priced house, six months longer than last year and the longest required savings time nationwide.

“This is largely driven by an 8.0% increase in the median house value in Sydney of $79,500 for the 12 months to June 2016, with wage growth failing to keep up at 2.2% – the lowest growth rate in five years,” the report notes.

Melbourne first homebuyers need to save on average for 6.2 years for a 20% deposit of $148,600.

By comparison, first homebuyers in Hobart and Perth take just 3.8 years on average to save a 20% deposit of $78,100 and $101,300 respectively.

According to the report, Perth is the only capital city where the average required savings time for a house has not increased year-on-year (3.8 years, unchanged compared with last year).

“[This has been] likely driven by a $19,000 fall in the median house value in 2016. The stark differences between the capital cities illustrate the two-speed nature of Australia’s economy and its effect on property prices and housing,” the report said.

Source: Bankwest First Time Buyer Deposit Report

In terms of the local government areas (LGAs) where it takes the longest time to save a deposit, eight of the top 10 were in New South Wales, with just one each in Perth and Victoria.

“Peppermint Grove holds onto title as the LGA nationwide where it takes longest to save for a house Peppermint Grove in Western Australia remains the LGA in which it takes the average FTB couple longest to save for a deposit on a median priced house (19.7 years). However, this is down from 20.2 years in 2015, likely driven by a decline in the median house value in the area, which fell by 4.5% in the year to June 2016.”